The ASX will allow companies to transfer cash and settle deals in RMB by the mid-year under a new agreement with the Bank of China.
The deal, announced today, will allow companies to avoid some foreign exchange costs when trading between Australia and China.
RMB is the first non-AUD currency to be settled on the ASX’s Austraclear. Austraclear currently settles $3 trillion in AUD cash transactions a year.
The Australian dollar, US dollar and Japanese yen are currently the only currencies that are directly traded with China’s RMB.
“The initiative aims to make it convenient for Chinese enterprises entering Australia to issue debt as well as public shares, and also to broaden the width and depth of Australia’s offshore RMB markets,” Bank of China executive VP Yue Yi said in a statement.
Bank of China and ASX executives said the deal represented a “major milestone in the internationalisation of the RMB and highlights the importance of the Australia-China trade relationship worth $120 billion last financial year”.
An ASX spokesman said there were no Chinese-domiciled companies listed on the ASX currently, but up to 30 of the 2,200 ASX-listed companies had “significant operations in China or a majority Chinese shareholding”.